Poverty And Inequality

Question 1

Absolute Poverty vs Relative Poverty

Answer 1

Absolute = Less than $2 per day
Relative = Earning less than 60% of average income

Question 2

How is inequality measured?

Answer 2

GINI Coefficient (income inequality)

Income Inequality - Uneven distribution of income amongst individuals and households

Question 3

GINI Coefficients

Answer 3

UK - 0.35
US - 0.49
EU - 0.3

Question 4

Causes Of Inequality:

Answer 4

Education: Disparities in access to quality education can lead to differences in skills and income.
Labour Market: Wage differentials based on skills, experience, and demand for certain jobs contribute to income inequality.
Wealth Accumulation: Those with access to investment opportunities and assets accumulate more wealth over time. Asset Inflation > Wage Inflation
Government Policies: Taxation, social safety nets, and welfare policies can either mitigate or exacerbate inequality.

Question 5

Policies to address income inequality:

Answer 5

• Progressive Taxation (to mitigate unequal advantages to wealth)
• Invest more into education and training programmes to close skills gaps (mitigate Wage Differentials)
• Minimum Wages (mitigates earning gaps) THINK CLASSICAL VS MODERN WAGE THEORY
• Increasing inheritance tax (to avoid unequal advantages to wealth)